Digital Distribution and the End of the First Sale Doctrine

There’s something about sharing a beloved book, CD, or movie with a friend. Not only you do you get to share something you enjoyed, but it increases the social nature of media, sparking discussions and expanding horizons.

The latest salvo came from Sony and Microsoft, who recently announced plans for the successors of the popular Playstation 3 and Xbox 360 video game consoles. Sony recently filed patents for technology which would use RF tags to prevent sales of secondhand games. Microsoft plans to require a constant internet connection to prevent sharing of games.

Obviously this makes business sense: used video game sales are at least $250 million a year. Figures for used CDs are unavailable but the music industry worried enough about them to justify lobbying for laws restricting their sales.

Yet while digital distribution has certainly improved access to media, at what cost have these gains come? As companies continue to focus on reducing secondhand sales and restricting lending, the first-sale doctrine—which allows consumers to lend, sell, destroy, and give away products they buy—may disappear.

In fact, the Supreme Court is currently considering a case, Kirtsaeng v. John Wiley & Sons, Inc., which may significantly reduce the power of consumers to control products that they’ve purchased. The defendant, a Thai national, noticed that the textbooks he was required to buy at Cornell were must costlier than similar textbooks sold in Thailand. In order to subsidize his education, he legally bought books in Thailand and resold them in the United States. The publishers have sought damages and an injunction to stop the resale of these “grey market” copies of their textbooks.

At question is § 109(a) of the Copyright Act, which codified the first sale doctrine: “Notwithstanding the provisions of Section 106(3), the owner of a particular copy . . . lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell . . . that copy.”

Plaintiffs argue that, because the textbooks were purchased in Thailand—outside the reach of the Copyright Act—the books were not “lawfully made” under the act (even though the textbooks are manufactured and sold by a company licensed by the copyright holder). Moreover, allowing people like Kirtsaeng to profit off of international arbitrage would hurt the ability of publishers to profitably provide textbooks.

The last time a similar case came before the Court, it split 4-4 (with Justice Kagan not participating). While it would certainly be a big blow to consumer rights if the Court limited the first-sale doctrine, will digital downloads eliminate the doctrine regardless? Should there be more concern about consumer rights, and should courts follow the lead of the European Union Court of Justice in UsedSoft v. Oracle, where it laid out a “first download doctrine” which would expand consumer rights in purchased software? Do consumers even care about owning media anymore? Share your thoughts in the comments.

One Response to Digital Distribution and the End of the First Sale Doctrine

It’s crazy to think how sites such as iTunes and Amazon originally helped, and were seemingly created to, drastically expand the availability of media to consumers, but now, they’re trying to limit not necessarily the availability of media, but our ability to spread it even further. Obviously this does make sense from a business standpoint, since limiting the amount that consumers can spread will ultimately lead to more sales from retail and direct downloads. I think the first sale doctrine should remain intact, but the first download doctrine is a little more worrisome for me. This is mainly because it is so easy to redistribute something digitally, as opposed to actually selling something physically. If I were to legally download a song, and then have free reign to distribute it however I wanted from that point, I could make it available to millions just by putting it on YouTube, and no one would have to actually purchase the song. They could just go on YouTube, convert the file to an mp3 for free, and there it is on their computer. We do need to always keep in mind the rights of the consumers, but we can’t let consumer rights get to the point where they are infringing on the rights of owners to enjoy the true value of their works.